Summa Said Seeking Funds for Global Grain Trading Assets

Graincorp’s shares are trading 4.3 percent higher than the A$2.68 billion, or A$11.75-a-share, offered by ADM, the world’s biggest corn processor, on Oct. 22 for the Australian company. Photographer: Jeremy Piper/Bloomberg

Oct. 31 (Bloomberg) -- Summa Group, Russia’s biggest port
operator, is raising money for a foreign grain trading
acquisition and was considering an offer for GrainCorp Ltd.
before Archer-Daniels-Midland Co. made a $2.8 billion takeover
bid, according to two people with knowledge of the matter.

The Moscow-based company is seeking to expand its presence
in Asia and around the world, and hasn’t ruled out a counterbid
for Sydney-based GrainCorp, according to a third person, who
asked not to be identified before plans are decided.

Summa submitted a formal request to VEB, the Russian
development bank where Prime Minister Dmitry Medvedev is
supervisory board chairman, to fund a possible acquisition of
GrainCorp, said the two people, who declined to be identified
because the information is private.

Graincorp’s shares are trading 4.3 percent higher than the
A$2.68 billion ($2.8 billion), or A$11.75-a-share, offered by
ADM, the world’s biggest corn processor, on Oct. 22 for the
Australian company. Buying GrainCorp, the only major publicly
traded grain merchant in Australia, would give the acquirer
control of seven of the eight ports that ship grain in bulk from
the nation’s east coast as well as a substantial malt producer.

‘Another Bidder’

“There was always going to be a situation where we might
see another bidder emerge,” Stan Shamu, a Melbourne-based
market strategist for IG Markets, said by phone. “Archer-Daniels will probably have to come in very strongly to get this
one over the line, they could be forced to raise their bid.”

GrainCorp, which last week said it was reviewing the ADM
offer, gained 0.5 percent to A$12.27 at 12:10 p.m. in Sydney,
while the key S&P/ASX 200 Index rose 0.6 percent. Angus Trigg, a
spokesman for GrainCorp, declined to comment as did Summa’s
spokesman Dmitry Minenko and VEB’s press service in Moscow.

“It would make sense for some Russian grain traders to seek
grain origination and consumption channels in other countries,”
said Dmitry Rylko, general director of the Moscow-based
Institute for Agricultural Market Studies.

Russia is targeting Asian customers for its agricultural
output as expanding economies to the east outpace growth in
Europe. Summa, which last month acquired 50 percent minus one
share in United Grain Co. from the Russian government, and VEB
plan to build an 8 billion-ruble ($255 million) terminal in the
Far East for sales to Asia. Summa hasn’t decided on a bid for
GrainCorp and is looking at many possible deals, one of the
people said.

Bunge, Noble

“We are looking outside because Russia doesn’t have a
global player in soft commodities markets,” Summa Chairman
Ziyavudin Magomedov told Rossiya 24 state television Sept. 4.
“We have Glencore, Dreyfus, Cargill here, and Russia, which
possesses such a powerful resource, doesn’t have its own worthy
global player.”

Glencore International Plc and Hong Kong-based commodity
trading company Noble Group are among companies that have
targeted agricultural assets, betting on rising demand from Asia
as living standards rise and diets improve.

Last year, GrainCorp’s revenue from Asia more than doubled
from the previous 12 months, making the region the company’s
second-biggest sales generator. ADM, which this month said it
had boosted its stake in GrainCorp to 14.9 percent, earned 52
percent of its revenue in the U.S. in fiscal 2012, according to
data compiled by Bloomberg.

GrainCorp, which traces its roots to 1916 and the Grain
Elevators Board of the New South Wales state agriculture
department, has seen its revenue surge since Australia’s 2006
decision to strip AWB Ltd. of its wheat export monopoly. An
inquiry found AWB was among firms that made illegal payments to
win contracts from the former Iraq regime of Saddam Hussein
under the United Nations’ oil-for-food program.